7.4% levy increase is urged for Minneapolis schools

If there's a bump in Minneapolis property taxes this year, chalk it up to public schools.

A 7.4 percent increase in property tax collections for 2013 was urged Tuesday by Minneapolis school finance officials, mainly to fund a pension hangover and to finance school expansions and renovations.

School board members reacted coolly to the recommendation, which contrasts with the slight increases under consideration by Hennepin County and the city of Minneapolis.

The county already has adopted a 1 percent limit on its 2013 levy increase.

The city's Board of Estimate and Taxation on Wednesday set the maximum increase for city functions at slightly under 1.8 percent.

The recommended $177.9 million school levy represents a tax increase for schools alone of about $90 annually on a home near the city median of $171,000.

One board member, Hussein Samatar, called the proposal "extremely expensive." The school board is scheduled to set a maximum levy for next year's taxes at its Sept. 25 meeting. It's expected to set the final levy in December after a public hearing and two community meetings.

The biggest cost driver is a $6.2 million contribution to pensions as part of a 2010 legislative deal to bail out a closed pension plan for employees of five local jurisdictions.

The increased costs from the deal hit the school budget this year but were paid from one-time dollars. The finance staff now is recommending a recurring pension levy until the pension obligation is retired, currently projected for 2031.

The district is also facing the financial consequences of its policy of encouraging enrollment growth, which requires more staff and the schools to house them in high-demand areas of the city.

The board already has approved a capital renovation plan to work on its existing buildings. Finance officials recommended that jump from $20.5 million this year to $56 million annually for the next four years.

Separately, it urged a building program for areas where enrollment is growing that would start at $5 million and top out at $30 million by 2017.